Credit Fair

KYC Policy

Issued by: Compliance Department
OF
K. M. Global Credit Pvt. Ltd.
CIN: U65999MH2018PTC308921

PREAMBLE

The “Know your Customer” guidelines were issued by Reserve Bank of India (RBI) in the context of the recommendations made by the Financial Action Task Force (FATF) on Anti Money Laundering - (AML) standards and on Combating Financing of Terrorism ( CFT) .These Standards have become the international benchmark for framing Anti Money Laundering and combating financing of terrorism policies by the regulatory authorities. In view of above, K. M. Global Credit Private Limited - (The Company) has adopted the said KYC guidelines with suitable modifications depending upon the activities undertaken by the Company. The Company has ensured that an appropriate policy frame work on KYC and AML measures are formulated in line with the prescribed Reserve bank of India Guidelines and duly approved by the Board of Directors of the Company.

OBJECTIVE, SCOPE AND APPLICATION OF THE POLICY

The objective of KYC guidelines is to prevent the Company for being used by all sorts of anti-social or criminal forces or individuals whether intentionally or unintentionally for Money Laundering Activities or for any terrorist financing activities. The KYC Norms shall enable the Company to know and understand its Customers and its financial dealings in detail which in turn shall help the Company to manage the risks more judiciously and prudently. It is in this context the KYC Policy has been framed by the Company for the following purposes:

  • To enable the Company to understand the Customers and their financial dealings more distinctly this in turn will enable the Company to manage the risk more carefully.
  • To prevent all types of criminal elements from dealing with the Company for any money Laundering Activities.
  • To control, to detect and report all types of suspicious activities in accordance with the rules and regulations.
  • To comply with all laws and guidelines of the Statutes.
  • To ensure that the concerned employees are trained in KYC/AML/CFT procedures. This Policy is applicable for all the offices including the branches that may be opened by the Company from time to time and to be read in conjunction with related operational guidelines issued from time to time. This policy shall cover all following key elements:
    • Customer Acceptance Policy ( CAP)
    • Customer Identification Procedures ( CIP)
    • Monitoring of Transactions
    • Risk Management
    • Training Program
    • Internal Control System
    • Record Keeping
    • Appointment of Principal Officers
    • Reporting to Financial Intelligence Unit – India ( FIU)

DEFINITION OF CUSTOMER & PERSON

“Customer” means a person who is engaged in the financial transaction or activity with the Company and includes the person who is engaged in the transaction or activity, is acting and as defined under the “Know your Customer Guidelines” issued by Reserve Bank of India (includes any amendments issued from time to time by RBI). The following are the salient features of the Customer:

  • A Person or entity that maintains an account /or has a business relationship with the Company.
  • A person who has a Registered Account with the Company and has a financial transaction with the Company.
  • A person on whose behalf the Registered Account is maintained (i.e. Beneficial Owner)
  • Beneficiaries of transactions conducted by professional intermediaries such as Stock brokers, Chartered Accountants, Solicitors etc., as permitted under the regulations.
  • Any other Person Connected with a financial transaction that could be of significant reputation or other risks to the Company say a wire transfer or issue of high value demand draft as a Single transaction.

“Person” as defined under the KYC Policy of Reserve Bank of India shall mean any of the following:

  • An Individual
  • A Hindu Undivided family
  • A Company
  • A Firm
  • An association of persons or a body of individuals , whether incorporated or not
  • Every artificial juridical person, not falling within any one of the above person (1 to 5)
  • Any agency , office or branch owned of controlled by any of the above persons (1 to 6)

KEY ELEMENTS

Customer Acceptance Policy( CAP):

  1. The Customer Acceptance Policy of the Company lays down the criteria for acceptance of Customers. The guideline in respect of Customer relationship with the Company broadly includes the following:
    • No account shall be opened in anonymous or fictitious/ benami name(s)/entity(ies).
    • To accept the Customer(s) only after verifying their identity and as laid down under the Customer identification procedures. The required checks before the opening of a new account to be carried out by the Company and to ensure that the identity of the Customer does not match with any persons relating with any criminal background or connected with any of the banned entities or any such individual connected with any terrorists or terrorist activities.
    • To Classify the Customers into various risk categories and based on the risk perception, apply the acceptance criteria for each category of Customers. Further to prepare the profile of each Customer based on the risk categories. Customers requiring high level of monitoring such as (Politically Exposed Persons) as explained in Annexure - I may, if considered necessary will be kept in the “High Risk Category”.
    • Not to open an account or close an existing account ( except as provided in this Policy) where identity of the account holder cannot be verified and/or documents/information required could not be obtained/confirmed as per the risk categorization , due to non- co-operation of the Customer or non-reliability of the data/ information furnished by the Customer to the Company. Appropriate safeguards to be provided to avoid any harassment to the Customers.
    • All documents and or information that are to be collected in respect of different categories of Customers depending upon the compliances with the Prevention of Money Laundering Act,2002( (PMLA) , guidelines of Reserve Bank of India and of the internal policies /rules of the Company.
    • The implementation of the Customer Acceptance Policy (CAP) will not be too restrictive and is in the best interest of the general Public.
    • The decision to open an account for “Politically Exposed Person” ( PEP) should be taken by a Senior Level Executives with the concerned of the Management. For example to take a decision on closing the account of the Customers it may be taken at a higher level after giving due notice to the Customers with appropriate reasons for taking the lead time.
    • The Circumstances in which a Customer is permitted to act on behalf of another Person or any other entity shall be clearly spelt out in conformity with the standard laid down procedures and as per the regulations of the statute that shall be followed so as to avoid when an account is operated by a mandate holder or where an account may be opened by an intermediary in the fiduciary capacity.
  2. The Company shall prepare a profile for each New Customer during the credit appraisal based on the risk categorization and as mentioned in this policy in Annexure –I. The Customer profile shall contain the information relating to the Customer’s identity, social and financial Status and nature of employment or business activities. The nature of due diligence shall depend upon the risk perceived by the Company. At the time of credit appraisal of the Customer, the details are recorded along with his profile based on the documents provided by the Customer and verified by Company either by itself or through the third party(ies). The documents collected will be as per the product norms as may be in practice. The Company while preparing the Customer profile will seek only such information from the Customer that are relevant to the risk category. All other information shall be sought from the Customer with his or her consent only after opening the Registered Account. The Customer’s documents shall be kept confidential and the details shall not be divulged for cross selling or for any other purposes.
  3. As per the KYC policy, in order to accept and identify the Customers, they shall be categorised based on the perceived risk broadly into three types – A , B and C. Category A includes High Risk Customers, Category B includes Medium Risk Customers and Category C includes Low Risk Customers. None of the above categories of Customers shall be exempted from Company’s KYC procedures, irrespective of the Status and relationship with the Company or its Promoters. The above requirements may be moderated according to the risk perception as explained in Annexure –I.
    1. High Risk Category –A
    2. High Risk Customers include the following:
      • Non Resident Customers
      • High Net worth Individuals without an occupation tract record of more than 3 years
      • Trust, Charitable Organizations, Non- Government Organization( NGO) , Organizations receiving donations
      • Companies having close family shareholdings and beneficial ownerships
      • Firms with Sleeping Partners
      • Politically Exposed Persons( PEPs) of Indian/ Foreign Origin
      • Non Face to Face Customers
      • Person with dubious reputation as per public information available
    3. Medium Risk Category –B
    4. Medium Risk Customers will include the following:
      • Salaried applicant with variable income/unstructured income receiving salary in Cheque
      • Salaried applicant working with Private Limited Companies, Proprietary, Partnership Firms
      • Self-employed professionals other than HNIs.
      • Self-employed customers with sound business and profitable tract record for a reasonable period
      • High Net worth Individuals with occupation track record of more than 3 years.
    5. Low Risk Category –C
    6. Low Risk Customers will include the following:
      • High Net worth Individuals
      • Entities whose identities and source of wealth can be easily identified and
      • All other Persons not covered under above two categories.

      • Further, Low Risk Customers will also include the following Persons:
      • Salaried employees with well –defined salary structures for over 5 years.
      • People working with Government owned Companies, regulators and statutory bodies, MNCs , rated Companies Public Sector Units, Public Limited Companies etc. In the event of the existing Customers or the beneficial owner of an existing account subsequently becoming “Politically Exposed Person ( PEP) , the Company will obtain Senior Management approval in such cases to continue the business relationship with such person and also undertake enhanced monitoring as indicated and specified in Annexure I
      • People belonging to lower economic strata of the Society whose accounts show small balances and low turnover;
      • People working with Public Sector Units
      • People working with reputed Public Limited Companies and Multinational Companies
      • Credit Score Above bench mark score

Customer Identification Procedures (CIP):

  1. Customer Identification means identifying the Customer and verifying his/her identity by using reliable, independent source documents, data or information. Company shall obtain sufficient information necessary to verify the identity of each new customer along with brief details of its promoters and management, wherever applicable, whether regular or occasional and the purpose of intended nature of business relationship as specified in Annexure I and Annexure II. The requirement as mentioned herein may be moderated according to the risk perception for e.g. in the case of public listed Company it may not be necessary to identify all the shareholders.
  2. Besides risk perception, the nature of information /documents required would also depend on the type of Customer (individual, corporate etc). For Customers who are natural persons, Company shall obtain sufficient identification data to verify the identity of the Customer, his address/ location and also his recent photograph.
  3. If the Customer is a Legal person or entity the Company shall:
    • Verify the Legal Status of the Person or entity through the documents that relevant and submitted by them.
    • Verify that any person purporting to act on behalf of the legal person or entity is so authorised and identify and verify the identity of that person.
  4. To understand the ownership and control structure of the Customer and determine who the natural persons are who ultimately control the legal person. The Customer identification requirements as mentioned in Annexure –I & Annexure –II may be relied upon for Customer Identification. The Company will frame internal rules and guidelines based on the experience of dealing with such persons or entities by applying normal prudence and as per legal requirements.
  5. The company will formulate and implement a Customer identification Program to determine the true identity of its Customers keeping in view of the above. The Policy shall also cover the identification procedures to be carried out at different stages: i.e. while establishing a relationship; carrying out a financial transaction or when there is a doubt about the authenticity / veracity or the adequacy of previously obtained Customer Identification Data.
Note: The Company shall periodically update Customer Identification Data after the transaction is entered. The periodicity of updating the Customer Identification data shall be once in ten years in case of Low Risk Category Customers and once in two years in case of High Risk Customer and once in 8 Years of Medium Risk Customers.

Monitoring of Transactions:

On-going monitoring is an essential element of effective KYC procedures. The extent of Monitoring of transactions will depend upon taking into consideration the risk profile and risk sensitivity of the account. The Company shall make endeavours to understand the normal and reasonable activity of the Customer so that the transactions that fall outside the regular pattern of activities can be identified, special attention shall be paid to all complex, unusual large transactions and all unusual patterns, which have no apparent economic or visible lawful purpose. The Company may prescribe threshold limits for a particular category of accounts and pay particular attention to the transactions which exceed these limits. The Transactions that involve large amounts of cash inconsistent with the normal and expected activity of the customer should particularly attract the attention of the Company. Higher risk accounts shall be subjected to intense monitoring. The Company shall set key indicators for such accounts based on the background of the Customer, country of origin, source of funds, the type of transactions involved and other risk factors which shall determine the extent of monitoring. The Company shall carry out the periodic review of risk categorization of transactions/ customer’s accounts and the need for applying enhanced due diligence measures at a periodicity of not less than once in six months. The Company shall explore the possibility of validating the new account opening applications with various watch lists available in public domain, including RBI watch list.

Risk Management:

The management of the Company under the supervision of the Board of Directors and the Loan and Risk Committee shall ensure that an effective KYC programme is put in place by establishing appropriate procedures and ensuring their effective implementations. It will cover proper management oversight, systems and controls, segregation of duties, training and other related matters. Responsibility will be explicitly allocated within the Company for ensuing that the policies and procedures as applicable to Company are implemented effectively. The Company shall devise procedures for creating Risk profiles of their existing and new customers and apply various Anti Money Laundering measures keeping in view the risks involved in a transaction, account or business relationship.

Training Program:

The Company shall have on going employee training programs from time to time so that the members of the Staff are adequately trained in KYC/AML./CFT procedures. Training requirements shall have different focuses for front line staff, compliance staff and officer/ staff dealing with new Customers so that all those concerned fully understand the rationale behind the KYC policies and implementation of them consistently.

Internal Control System:

The Company’s Internal Audit and Compliance functions will evaluate and ensure adherence to the KYC policies and procedures. As a general rule, the Compliance function will provide an independent evaluation of the Company’s own policies and procedures, including legal and regulatory requirements. The Management of the Company under the supervision of the Committee shall ensure that the audit function is staffed adequately with skilled individuals. Internal Auditors will specifically check and verify the application of KYC procedures at the branches and comment on the lapses observed in this regard. The compliance in this regard shall be put up before the Committee along with their normal reporting frequency. Further , the Company shall have an adequate screening mechanism in place as in integral part of their recruitment/hiring process of personnel so as to ensure that person of criminal nature/ background do not get an access, to misuse the financial channel.

Record Keeping:

  1. Maintenance of Records of Transactions:
  2. The Company shall maintain proper record of the transactions as required under Section 12 of the PMLA read with Rule 3 of the Prevention of Money Laundering Rules, 2005(PML Rules) as mentioned below:
    • All cash transactions of the value of more than Rs. 10,00,000/- ( Rupees Ten Lakh Only) or its equivalent in foreign currency, though by policy the Company neither accept cash deposit not in foreign Currency.
    • All series of Cash transactions integrally connected to each other which have been valued below Rs. 10,00,000/- ( Rupees Ten Lakh Only) or its equivalent in foreign currency where such series of transactions have taken place within a month.
    • All transactions involving receipts by non-profit organizations of Rs.10,00,000/- ( Rupees Ten Lakh Only) or its equivalent in foreign currency.
    • All cash transactions, where forged or counterfeit currency notes or bank notes have been used as genuine and where any forgery of a valuable security has taken place; any such transactions.
    • All suspicious transactions whether or not made in cash and in manner as mentioned in the PML Rules framed by the Government of India under PMLA. An illustrative list of suspicious transaction pertaining to financial services is given in Annexure III.
  3. Records to contain the specific information:
  4. The Records referred to above as mentioned in Rule 3 of PML Rules to contain the following information:
    • The nature of the transactions
    • The amount of the transactions and the currency in which it was denominated
    • The date on which the transaction was conducted
    • The parties to the transaction.
  5. Maintenance and preservation of records Section 12 of PML Act requires the Company to maintain records as under:
    1. The Records of all transactions referred to in Clause (a) of sub –section (1) and Section 12 read with Rule 3 of the PML Rules is required to be maintained for a period of 10 ( Ten) years from the date of transaction between the Customers and Company.
    2. The records of the identity of all Customers of the Company are required to be maintained for a period of 10 ( Ten) years from the date of cessation of transactions between the Customers and Company.
    3. The Company shall take appropriate steps to evolve a system for proper maintenance and preservation of information in a manner (in hard and or soft copies) that allows data to be retrieved easily and quickly whenever required or as and when requested by the Competent Authorities.

Appointment of Principal Officer, Compliance Officer and Designated Director:

The Company has a senior management officer to be designated as Compliance/Principal Officer. Compliance/Principal Officer shall be located at the head/corporate office of the Company and shall be responsible for monitoring and reporting of all transactions and sharing of information as required under the law. He shall maintain close liaison with enforcement agencies, banks and any other institution which are involved in the fight against money laundering and combating financing of terrorism. In terms of Section 14.2 of Prevention of Money-laundering (Amendment) Act, 2012, NBFC shall also designate a person as a 'Designated Director' to ensure overall compliance with the obligations imposed under chapter IV of the Act and the Rules.

Reporting to Financial Intelligence Unit – India:

The PO shall report relating to cash and Suspicious Transactions, if detected, to The Director, Financial Intelligence Unit- India ( FIU-INDIA) as advised in terms of the PML Rules in the prescribed formats as designed and circulated by RBI at the following address:

The Director
Financial Intelligence Unit – India
6 th Floor, Hotel Samrat
Chankayapuri, New Delhi 110021.

Combating financing of terrorism

  1. In terms of PMLA Rules, suspicious transaction shall include inter alia transactions which give rise to a reasonable ground of suspicion that these may involve financing of the activities relating to terrorism. The company, therefore, shall develop suitable mechanism through appropriate policy framework for enhanced monitoring of accounts suspected of having terrorist links and swift identification of the transactions and making suitable reports to the Financial Intelligence Unit – India (FIU-IND) on priority.
  2. As and when list of individuals and entities, approved by Security Council Committee established pursuant to various United Nations' Security Council Resolutions (UNSCRs), is circulated by Reserve Bank, the company shall ensure to update the consolidated list of individuals and entities as circulated by Reserve Bank. Further, the updated list of such individuals/entities shall be accessed in the United Nations website at http://www.un.org/sc/committees/1267/consolist.shtml. The company shall before opening any new account, ensure that the name/s of the proposed customer does not appear in the list. Further, the company shall scan all existing accounts to ensure that no account is held by or linked to any of the entities or individuals included in the list. Full details of accounts bearing resemblance with any of the individuals/entities in the list shall be immediately be intimated to RBI and FIU-IND. KYC norms/AML standards/CFT measures have been prescribed to ensure that criminals are not allowed to misuse the financial channels. Adequate screening mechanism shall be put in place by the company as an integral part of recruitment/hiring process of personnel.


  3. The company shall take into account risks arising from the deficiencies in AML/CFT regime of countries of Iran, Angola, Democratic People's Republic of Korea (DPRK), Ecuador, Ethiopia, Pakistan, Turkmenistan and SaoTome and Principe and list of countries circulated by RBI from time to time.

General:

  1. Confidentiality of Customer Information: The employees of Company shall maintain strict confidentiality of the fact of furnishing/reporting details of suspicious transactions.
  2. Customer education : The Company shall educate the Customers on the objectives of the KYC program so that the Customer understands & appreciates the motive and purpose of collection such information. The Company shall prepare literature/ pamphlets and terms and conditions etc., so as to educate the customers about the objectives of the KYC. The Front office staff too shall be specifically trained to handle such situation while dealing with Customers.
  3. Introduction of New Technologies: The Company shall pay special attention to any money laundering threats that may arise from new or developed technologies including online transactions that may favour anonymity and take measures if needed, to prevent their use in money laundering. The Company shall ensure that any remittance of funds by way of demand drafts, mile transfers or any other mode for any amount is affected by Cheque(s) and not against cash Payments.
  4. Applicability to Branches and subsidiaries outside India: The employees of Company shall maintain strict confidentiality of the fact of furnishing/reporting details of suspicious transactions.
  5. Closure of Accounts/ Termination of Financing/ Business Relationship : Where ever the Company is unable to apply the KYC measures due to non- furnishing of information and /or non-operation by the Customer, Company shall terminate Financing/ Business Relationship after issuing due notice to the Customer explaining the reason for taking such a decision. Such decision shall be taken with the approval of the Director or Key Managerial Persons Authorization for the purpose.
  6. KYC for existing Accounts: While the KYC will apply to all new Customers, the same would be applied to the existing Customers too on the basis of materiality and risk. However, transactions with the existing Customers would be continuously monitored for any unusual pattern in the operations of the accounts.
  7. Updating in KYC Policy of Company: The Principal Officer ( PO) after taking the due approval from the Board of Directors or the committee if any constituted by the Board, make the necessary amendments / modifications in the KYC/AML/CFT Policy or such other statutory authority’s requirements/ updates/ amendments from time to time.
  8. Suspicion of money laundering/terrorist financing With a view to preventing NBFCs from being used, intentionally or unintentionally, by criminal elements for money laundering or terrorist financing, it was clarified that whenever there is suspicion of money laundering or terrorist financing or when other factors give rise to a belief that the customer does not, in fact, pose a low risk, The Company will carry out full scale customer due diligence (CDD) before opening an account.
  9. Filing of Suspicious Transaction Report (STR) The Company shall not open an account (or shall consider closing an existing account) when it is unable to apply appropriate CDD measures. In the circumstances when The Company believes that it would no longer be satisfied that it knows the true identity of the account holder, The Company shall also file an STR with FIU-IND.

The Company shall abide by all guidelines, directives, instructions and advices of Reserve Bank of India / SEBI as shall be in force from time to time. The contents in this document shall be read in conjunction with these guidelines, directives, instructions and advices. The company shall apply better practice so long as such practice does not conflict with or violate Reserve Bank of India / SEBI regulations.

This document is the property of the Company. It contains information that is internal to the company and is of competitive value and sensitive in nature. All employees must treat its contents as confidential and keep it secure.

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Annexure –I

CUSTOMER IDENTIFICATION REQUIRMENTS – (INDICATIVE GUIDELINES)

  1. Accounts of Politically Exposed Persons( PEPs) resident outside India:
    “Politically Exposed Persons” are individuals who are or have been entrusted with prominent public functions in a foreign Country e.g. Head of States or of Governments, Senior Politicians, Senior Government /Judicial military officers, Senior executives of state-owned Corporate , important political party officials etc. Branch /office shall gather sufficient information on any Person/ Customer of this category intending to establish a relationship and check all the information available on the Person in the Public domain. Branch/ office shall verify the identity of the Person and seek information about the sources of funds before accepting the PEP as a Customer. The decision to provide financial services to an account for PEP shall be taken at a senior level and shall be subjected to monitoring on an on-going basis. The above norms may also be applied to the accounts of the family members or close relatives of PEPs.

  2. Accounts of non-face to face Customers:
    In case of Non-face to face Customers, i.e. All Customers of K. M. Global Credit Private Limited apart from applying the usual Customer Identification procedures, there must be specific and adequate procedures to mitigate the higher risk involved. Certification of all the documents presented may be insisted upon and, if necessary, additional documents may be called for. In case of cross-border Customers, there is the additional difficulty of matching the Customer with the documentation and the NBFCs may have to rely on third party certification/ introduction. In such cases, it must be ensured that the third party is a regulated and supervised entity and has adequate KYC Systems in place.

  3. Trust/Nominee or Fiduciary Accounts:
    Branch/ Offices shall determine whether the Customer is acting on behalf of another person as Trustee /Nominee or any other intermediary. If so, they shall insist on receipt of satisfactory evidence of the identity of the intermediaries and of the Persons on whose behalf they are reacting as also obtained details of the nature of the trust or other arrangements in place. The Company shall take reasonable precautions to verify the identity of the trustees and the settlers of trust (including any Person settling assets into the Trust), grantors, protectors, beneficiaries and signatories. Beneficiaries shall be identified when they are defined. In the case of a foundation, the Company shall take steps to verify the founder managers/ Directors and the beneficiaries, if defined. There exists the possibility that Trust/ nominee or fiduciary accounts can be used to circumvent the Customers Identification Procedures.

  4. Accounts of Companies and Firms:
    Branch/Office need to be vigilant against business entities being used by individuals as a front for maintaining accounts with NBFCs. Branch/Office may examine the control structure of the entity, determine the source of funds and identify the natural persons who have a controlling interest and who comprise the management. These requirements may be moderated according to the risk perception e.g. in the case of a public Company it shall not be necessary to identify all the shareholders.

  5. Customer Accounts opened by Professional intermediaries
    When the branch/office has knowledge or reason to believe that the Customer account opened by a professional intermediary is on behalf of a single customer that Customer must be identified. Branch/Office may hold “Pooled” accounts managed by professional intermediaries on behalf of entities like mutual funds, pension funds or other types of funds. Branch/ Office also maintain “Pooled” accounts managed by lawyers/ Chartered Accountants for funds held “On deposit” for range of Customer. Where funds held by the intermediaries are not co-mingled at the branch/office and there are sub- accounts, each of them attributable to a beneficial owner, all the beneficial owners must be identified. Where such funds are co-mingled at the branch/office, the branch/office shall still look through to the beneficial owners. Where the branch/office rely on the “Customer Due Diligence (CDD) done by an intermediary, they should satisfy themselves that the intermediary is regulated and supervised and has adequate systems in place to comply with the KYC requirements. It should be understood that the ultimate responsibility for knowing the Customers lies with the Branch/Office.

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Annexure –II

Customer Identification Procedure Features to be verified and Documents that may be obtained from Customers

Customers/Clients Documents ( Certified copy of any one of the following official valid documents)
Individuals ( Applicant/ Co-Applicant) – Proof of Identity and Address
  • Passport
  • PAN Card
  • Voter’s Identity Card
  • Driving License
  • Identity Card ( subject to the Company’s Satisfaction)
  • Aadhaar Card
  • Letter from a recognised Public authority or public servant verifying the identity and residence of the Customer to the satisfaction of the Company.
  • Telephone Bill
  • Bank account Statement
  • Letter from any recognised public authority
  • Electricity Bill
  • Letter from employer (subject to the Company’s Satisfaction).

Any one document which provides Customer Information to the satisfaction of the Company will suffice.

One recent Photograph except in case of transactions referred to in Rule 9 (1) (b) of the PML Rules.

Accounts of Companies
  • Name of the Company
  • Principal place of Business
  • Mailing address of the Company
  • Telephone/Fax Number
  1. Certificate of incorporation and Memorandum & Articles of Association;
  2. Resolution of the board of Directors to open an account and identification of those who have authority to operate the account;
  3. Power of attorney granted to its managers, officers or employees to transact business on it behalf;
  4. an officially valid document in respect of managers, officers or employees holding an attorney to transact on its behalf;
  5. Copy of PAN allotment letter;
  6. Copy of telephone bill
Accounts of Partnership Firms
  • Registration Certificate , if registered;
  • Partnership Deed;
  • Power of attorney granted to a partner or an employee of the firm to transact business on its behalf;
  • Any officially valid document identifying the partners and the persons holding the Power of attorney and their addresses;
  • Telephone bill in the name of firm/ Partners
Accounts of Trusts and foundation
  • Names of trustees, settlers, beneficiaries and signatories
  • Certificate of registration, if registered;
  • Trust Deed;
  • Power of attorney granted to transact business on its behalf ;
  • Any officially valid document to identify the trustees, settlers, beneficiaries ad those holding power of attorney, founders/managers/directors and their addresses;
  • Resolution of the Managing body of the foundation/association;
  • Telephone bill
Accounts of unincorporated association or a body of individuals
  • Resolution of managing body of such association or body of individuals
  • Power of attorney granted to him to transact on its behalf;
  • An officially valid document in respect of the person holding and attorney to transact on its behalf and such other information as may be required by Company to collectively establish the legal existence of such as association or body of individuals.
Accounts of proprietorship ConcernsProof of the name, address and activity of the concern

Apart from Customer Identification procedures as applicable to the proprietor any two of the following documents in the name of the proprietary concern would suffice

  • Registration certificate (in the case of a registered concern)
  • Certificate/ licence issued by the Municipal authorities under shop & establishment act
  • Sales and income tax returns
  • CST/VAT/GST Certificate
  • Certificate/registration document issued by sales tax/service tax/professional tax authorities
  • Licence/ certificate of practice issued in the name of the proprietary concern by any professional body incorporated under a statute. The complete income tax return (not just the acknowledgement) in the name of the sole proprietor where the firm’s income is reflected duly authenticated/ acknowledged by the income tax authorities.

In cases where the Company is satisfied that it is not possible to furnish two such documents, it would have the discretion to accept only one of those documents as activity proof. In such cases, the Company, however, would have to undertake contact point verification collect such information as would be required to establish the existence of such firm, confirm clarify and satisfy themselves that the business activity has been verified from the address of the proprietary concern.

*Compulsory in case of non-resident individuals.

If any of the above documents are in any language other than English, it shall be translated into English along with a certificate from translator /Notary public.

“Officially valid document” is defined to mean the passport , the driving license, the permanent account number card, the voter’s identity card issued by the Election Commissioner of India or any other document as may be required by the Company.

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Annexure –III

Illustrative List Of Suspicious Transaction Pertaining To Financial Services

Broad Categories of reason for suspicious and examples of suspicious transactions for non – banking financial Companies are indicated as under:

  1. Identity of Client:
    • False Identification documents
    • Identification documents which could not be verified within reasonable time.
    • Accounts opened with names vary close to other established business entities.
  2. Background of Client:
    • Suspicious background or links with known criminals.
  3. Multiple Accounts:
    • Large number of accounts having a common account holders, introducer or authorised.
  4. Signatory with no rationale:
    • Unexplained transfers between multiple accounts with no rationale.
  5. Activity in accounts:
    • Unusual activity companies with past transactions – sudden activity in dormant accounts.
    • Activity inconsistent with what should be expected from declared business.
  6. Nature of transaction :
    • Unusual or unjustified complexity
    • No economic rationale or bonafide purpose
    • Frequent purchases of drafts or other negotiable instruments with cash;
    • Nature of transactions inconsistent with what would be expected from declared business.
  7. Value of Transaction :
    • Value just under the reporting threshold amount in an amount attempt to avoid reporting.
    • Value inconsistent with the Client’s apparent financial standing.
  8. Illustrative of suspicious Transactions:
    • Reluctant to part with information, data and documents;
    • Submission of false documents, purpose of loan and details of accounts;
    • Reluctance of furnish details of source of funds of initial contribution;
    • Reluctance to meet in person, representing through power of attorney;
    • Approaching a distant branch away from own address;
    • Maintaining multiple accounts without explanation;
    • Payments of initial contribution through unrelated third party account;
    • Suggesting dubious means for sanction of loan;
    • Where transactions do not make economic sense;
    • Where doubt about beneficial ownership;
    • Encashment of loan through a fictitious bank account;
    • Sale consideration quoted higher or lower than prevailing area prices;
    • Request for payment in favour of third party with no relation to transaction;
    • Usage of loan amount for purposes other than stipulated in connivance with vendors or agent;
    • Multiple funding involving NGO, Charitable Organization, small and medium establishment, self-help groups, micro finance groups etc;
    • Frequent request for charge of address;
    • Over payment of instalments with a request to refund the overpaid amount.

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Annexure –IV

An Indicative List of Suspicious Activities

  • Transactions Involving Large Amounts of Cash
    • Company transactions, that are denominated by unusually large amounts of cash, rather than normally associated with the normal commercial operations of the company, e.g. cheques,
  • Transactions that do not make Economic Sense
    • Transactions in which assets are withdrawn immediately after being deposited unless the business activities of the customer's furnishes a plausible reason for immediate withdrawal.
  • Activities not consistent with the Customer's Business
    • Accounts with large volume of credits whereas the nature of business does not justify such credits.
  • Attempts to avoid Reporting/Record-keeping Requirements
    • A customer who is reluctant to provide information needed for a mandatory report, to have the report filed or to proceed with a transaction after being informed that the report must be filed.
    • Any individual or group that coerces/induces or attempts to coerce/induce a NBFC employee not to file any reports or any other forms.
    • An account where there are several cash transactions below a specified threshold level to a avoid filing of reports that may be necessary in case of transactions above the threshold level, as the customer intentionally splits the transaction into smaller amounts for the purpose of avoiding the threshold limit.
  • Unusual Activities
    • Funds coming from the countries/centers which are known for money laundering.
  • Customer who provides Insufficient or Suspicious Information
    • A customer/company who is reluctant to provide complete information regarding the purpose of the business, prior business relationships, officers or directors, or its locations.
    • A customer/company who is reluctant to reveal details about its activities or to provide financial statements.
    • A customer who has no record of past or present employment but makes frequent large transactions.
  • Certain NBFC Employees arousing Suspicion
    • An employee whose lavish lifestyle cannot be supported by his or her salary.
    • Negligence of employees/willful blindness is reported repeatedly.

Some examples of suspicious activities/transactions to be monitored by the operating staff-

  • Large Cash Transactions
  • Multiple accounts under the same name
  • Placing funds in term Deposits and using them as security for more loans
  • Sudden surge in activity level
  • Same funds being moved repeatedly among several accounts

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